According to the report from Leibniz Centre for European Economic Research (ZEW), indicator of economic sentiment for Germany has again risen sharply in December 2019, now being valued at 10.7 points. This corresponds to a 12.8-point increase compared to the previous month and a 33.5-point increase compared to the October reading. This is the indicator’s highest value since February 2018. The assessment of the economic situation in Germany has also improved in the current December survey, with the corresponding indicator climbing to a level of -19.9 points, 4.8 points higher than in November.
“At first glance, the renewed substantial increase of the ZEW Indicator of Economic Sentiment may seem surprising. It rests on the hope that German exports and private consumption will develop better than previously thought. This hope results from a higher than expected German foreign trade surplus in October, alongside relatively robust economic growth in the EU in the third quarter and a stable German labour market. The rather unfavourable figures for industrial production and incoming orders for October, however, show that the economy is still quite fragile,” comments ZEW President Professor Achim Wambach.
Financial market experts’ sentiment concerning the economic development of the eurozone has also considerably improved once again, bringing the indicator to a current level of 11.2 points for December, 12.2 points higher than in the previous month. The indicator for the current economic situation in the eurozone also rose significantly again by 4.9 points, climbing to a current reading of -14.7 points.
According to the report from Office for National Statistics, monthly gross domestic product (GDP) growth was 0.0% in October 2019, with growth in services and production offset by a notable fall in construction, which had its lowest level of output since January 2018. Economists had expected a 0.1% increase.
Rolling three-month GDP showed no growth in October 2019 after growth of 0.3% in Quarter 3 2019. The services sector was the only positive contributor to gross domestic product (GDP) growth in the three months to October 2019, growing by 0.2%. Output in both the production and construction sectors contracted, by 0.7% and 0.3%, respectively. The weakness seen in construction was predominantly driven by a fall of 2.3% in October.
Commenting on today’s GDP figures for the 3 months to October, an ONS Spokesperson said: “The UK economy saw no growth in the latest three months. There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April. Construction also declined across the last three months with a notable drop in house building and infrastructure in October.”
China shouldn’t attach too much significance to the 6% growth rate, a government economist said, as debate heats up over economic targets for next year.
“6% is not a special watershed,” said Wang Yiming, a deputy director at the Development Research Center of the State Council.
“The growth rate, may it be higher or lower, is not the main problem. The key is the quality and efficiency of growth,” Wang said.
At the same time, he argued that it is still important to maintain a mid to high growth rate. Low gross domestic product expansion will pose challenges to employment and controlling the overall leverage ratio, and will leave little room for structural adjustments, he warned.
China’s economy expanded at the slowest pace of 6% in decades in the third quarter quarter, and is poised to slow further as domestic demand remains weak and external uncertainties linger. Observers including Goldman Sachs Group Inc expect policy makers to set the growth target at “around 6%” for next year.
Credit Suisse discusses USD/JPY technical outlook and sees a scope for a tactical top formation on a daily close below 108.47/24.
"Below key 55-day average and price support at 108.47/24 would mark a top USDJPY remains capped by its falling 13- and 200-day averages as well as key price and retracement resistance at 109.21/23, and the immediate spotlight remains on key flagged support, starting at the 55-day average at 108.47 and stretching down to the 108.28/24 recent lows. A close below 108.24 would suggest a more significant top has been established to mark a more meaningful turn lower with support seen next at the 107.88 November low, with the 38.2% retracement of the entire rally from August at 107.72. Whilst we would look for this to hold at first, a break can see support next at 107.10/03. Above 109.00 can ease the immediate pressure off 108.47/24, with a break above 109.21/23 still needed to suggest the worst of the sell-off is over, clearing the way for a move back to 109.39, then a retest of the recent high and downtrend from late 2019 at 109.70/80," CS adds.
Data from China Association of Automobile Manufacturers (CAAM) showed that auto sales in China fell for a 17th consecutive month in November, with the number of new energy vehicles (NEVs) sold contracting for a fifth month in a row.
Total auto sales in the world’s biggest auto market fell 3.6% from the same month a year earlier. That follows a drop of 4% in October and 5.2% in September. Car sales in the country contracted last year for the first time since the 1990s against a backdrop of slowing economic growth and a crippling Sino-U.S. trade war.
“The China 5-6 emission standard change is the biggest reason for this year’s sales plunge,” said Chen Shihua, deputy secretary general at CAAM, referring to how local governments had accelerated changes to emission standards this year.
He added that overall car production levels were now returning to normal and carmakers had boosted their product line-ups in the past few months.
In November, sales of NEVs fell 43.7%, CAAM said, following a 45.6% drop in October. NEV sales had jumped almost 62% last year even as the broader auto market contracted.
According to Karen Jones, analyst at Commerzbank, EUR/USD may have failed on its initial test of the 5 month downtrend at 1.1111, however the sell-off has so far held over the 20 day ma at 1.1046.
“It has not taken any support of note out and as a consequence attention therefore remains on the topside and the down trend guards the 1.1180 October high and the 1.1242 channel resistance and eventually the 1.1358 200 week ma. This latter level remains the critical break point on the topside from a medium term perspective. Key nearby support is the recent low at 1.0981. Failure at 1.0980 targets the 1.0943 78.6% retracement. This is seen as the last defence for the 1.0879 October low and the 1.0814 Fibo retracement, and if seen, we will look for signs of reversal from here.”
National Institute of Statistics and Economic Studies (INSEE) said that in October 2019 output increased in the manufacturing industry (+0.5%, after +0.8%), as well as in the whole industry (+0.4%, after +0.4%). Economists had expected a 0.2% increase in the whole industry.
Over the last three months, output decreased in manufacturing industry (−0.8%), and more strongly in the whole industry (−1.2%). Over the last three months, output slumped in the manufacture of coke and refined petroleum products (−10.9%). It declined markedly in mining and quarrying, energy, water supply (−3.3%) and in the manufacture of machinery and equipment goods (−1.9%) and more moderately in “other manufacturing” (−0.3%), in the manufacture of transport equipment (−0.8%) and in the manufacture of food products and beverages (−0.5%).
In the manufacturing industry, output of the last three months was lower than the same months of 2018 (−0.3%), as well as in the whole industry (−0.4%). Over a year, output slumped strongly in the manufacture of coke and refined petroleum products (−21.1%). It dipped in mining and quarrying, energy, water supply (−1.3%), in the manufacture of machinery and equipment goods (−1.1%), in the manufacture of food products and beverages (−0.6%) and it was virtually stable in the manufacture of transport equipment (−0.1%). Conversely, output increased slightly in “other manufacturing” (+0.5%).
Danske Bank analysts point out that compared to yesterday we have a busier day ahead of us with lots of interesting data releases including the UK GDP estimate for October.
“Globally, we have the monthly UK GDP estimate for October at 10:30 CET. The UK PMIs suggest that underlying growth remains weak, driven by slower global growth and high Brexit uncertainty. At 11:00 CET, German ZEW expectations are due out and they are expected to show a small rebound. At 12:00 CET, US small business optimism from NFIB is due for release. Note that YouGov is set to publish a new seat projection for the upcoming UK election tonight (23:00 CET). The last prediction released a couple of weeks ago showed a solid majority for the Conservatives and given that it was the only projection that correctly projected Theresa May would lose her absolute majority in 2017, investors and Brexit watchers will analyse the results thoroughly.”
China's consumer inflation climbed to nearly eight-year peaks in November as pork prices doubled, but factory-gate prices remained in the red, adding to uncertainty over whether the manufacturing sector is bottoming out as trade risks persist.
Consumer prices in November rose 4.5% on year, the fastest pace seen since January 2012, driven mostly by a surge in pork prices as African Swine Fever ravaged the country's hog herds, National Bureau of Statistics (NBS) data showed on Tuesday. That topped analysts' expectations of 4.2% and October's 3.8% rise.
However, core inflation - which excludes food and energy prices - stayed largely subdued.
In contrast, the producer price index (PPI), seen as a key indicator of corporate profitability, fell 1.4% on year, falling for the fifth month in a row. That compared with a 1.5% drop forecast and 1.6% fall in October.
Price declines for manufactured goods suggest demand remains weak, despite hints of improvement in recent factory surveys. Weak prices were mainly seen in oil and gas extraction and chemical fiber manufacturing sectors.
According to the report from Insee, in Q3 2019, net payroll job creation reached 42,300, that is +0.2% as in the previous quarter. Payroll employment increased by 33,700 in the private sector, an increase comparable to the previous quarter (+43,500 jobs); it increased slightly again in the public sector (+8,600 jobs after +10,600). Year on year, it rose by 258,600 (+1.0%): +231,000 jobs in the private sector and +27,700 jobs in the public service.
In Q3 2019, payroll employment remains almost stable in industry: +1,500 jobs after +1,400 the previous quarter. Over a year it increased by 17,400 jobs (that is +0.6%).
Payroll employment in construction continues to grow strongly: +9,000 jobs after +7,600 jobs (that is +0.6% after +0.5%). Year on year, employment in construction increased by 42,200 jobs (that is +3.1%).
In Q3 2019, payroll employment increased by 23,500 in market services, that is +0.2%, after +0.3% in the previous quarter. Year on year, the market services sector as a whole provided for the large majority of net job creation (+167,500 jobs).
Temporary employment decreased marginally again: –2,900 jobs in Q3 2019, i.e. –0.4% as in Q2 2019. Over a year, it declined by 8,000 jobs, that is −1.0%.
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.1066
Support levels (open interest**, contracts):
- Overall open interest on the CALL options and PUT options with the expiration date January, 3 is 48509 contracts (according to data from December, 9) with the maximum number of contracts with strike price $1,1200 (5360);
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.3155
Support levels (open interest**, contracts):
- Overall open interest on the CALL options with the expiration date January, 3 is 20783 contracts, with the maximum number of contracts with strike price $1,3500 (4944);
- Overall open interest on the PUT options with the expiration date January, 3 is 17393 contracts, with the maximum number of contracts with strike price $1,2500 (2388);
- The ratio of PUT/CALL was 0.84 versus 0.80 from the previous trading day according to data from December, 9
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
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